NEW YORK, Dec. 11, 2014. Reuters – The market capitalisation of the 44 globally listed parent companies involved in corporate spinoff activity could reach $664bn by the end of 2014, finds new research by investment analysts, The Edge and Deloitte. This is a fivefold increase on $131 billion, the market value of the 32 parents companies that broke up in 2010. This is due to larger companies engaging in spinoffs, as well as higher volumes overall. A spinoff occurs where a division of a public company becomes an independently listed business.
The research Study indicates this increase will continue into 2015, as the market capitalisation of global corporations that have announced spinoffs for next year is already $775 billion.
Ryan Mendy, COO of The Edge Consulting Group, said: “Investors will be surprised to learn that 4 in 10 spinoffs don’t generate any value over year one. However, the investment returns we have discovered from the remainder are significant, and the total value of companies announcing global spinoffs has risen steeply since 2000. Combined with our analysis of predicted spinoffs yet to be announced, our research suggests the figure is likely to top $3 trillion by the end of 2016.”